There is magic in Kingston TOWN — THE PLACE I Long to be!
How does a Caribbean island of less than 3 million, go from having one of the highest levels of debt in the world, balance of payments crises, violence rivalling civil war levels, mass exodus, and two decades averaging near-zero growth, to steadily declining crime and homicide rates, its lowest unemployment and poverty rates in history, over 6 months of import cover, steady positive growth, and its best overall socio-economic stability and performance ever? And how does any country achieve this impressive turnaround with unprecedented speed? Just ask Jamaica!
Originally called Xaymaka — the land of wood and water — by the Arawaks, on a recent (too brief!) visit to Kingston, Jamaica felt more like the land of progress and hope — it’s palpable! “The 1970s was one of the most tumultuous eras of Jamaican history…thrown into a period of intense class struggle not experienced since the Great Depression and the 1938 general strike. Ultimately, a bloody campaign of violence driven by US imperialism defeated the struggle for socialism in Jamaica”, according to a pro-Marxist outlet — an ideology that Jamaica experimented with in the 1970s. From the 1980s to 2011, Jamaica suffered massive brain drain (which created a large and thriving diaspora), driven by social, political, and economic instability. With debt over 140% of GDP in 2009, Jamaica entered into several failed IMF programs but ultimately defaulted and engaged in domestic debt restructures in 2010 and 2012. The IMF program finally stuck in 2012, beginning what was arguably the most significant socio-economic transformation in the Caribbean of this century. And possibly the fastest ever — we expect no less from Jamaica!
JAMAICA HAS MADE THE MOST IMPRESSIVE TRANSFORMATION OF THIS CENTURY
The IMF and the private sector — via the Economic Programme Oversight Committee (EPOC) and the Economic Growth Council (EGC) — implemented sweeping reforms which have yielded Jamaica’s lowest unemployment level, lowest poverty level, and longest period of sustained positive growth, ever. Importantly, the state used its power over the last 12 years or so, to restructure its economy and empower its people, fostering greater self-sufficiency and independence, by creating an environment and structures for Jamaicans to secure and create jobs via greater domestic entrepreneurial activity, and also to hold the Government accountable for achieving its mandate.
Crucial to Jamaica’s transformation were fundamental macroeconomic and institutional reforms, such as (in no particular order) a floor (as opposed to the usual ceiling) on social spending imposed by the IMF and better targeting of that spending; reforms to support a thriving entrepreneurship / MSME sector such that Jamaica had the world’s best performing stock market in 2015, 2018, and 2019; a sweeping tax reform agenda; debt restructure exercises which helped to establish fiscal sustainability; foreign exchange reforms which allow JMD fluctuations in both directions to avoid JMD under / overvaluation and speculative demand for USD; fiscal reforms including a fiscal responsibility framework to limit deficit and debt levels, governed by an independent Fiscal Commission; the establishment of an independent EPOC which frequently publicly holds the Government to account for achieving its policy and macroeconomic management agenda; and reforms to support transparency and AML/CFT compliance.
The effect of reforms to existing institutions and the establishment of new ones as needed, cannot be overstated. While significant challenges remain, particularly as it relates to crime and violence, healthcare, education, drug use and trafficking, gang activity, white collar crime, etc. Jamaica has made surprising progress and is heading in the right direction — you can see and feel it when you walk around Kingston. The economy is now more diversified and resilient, more stable and productive, and more ‘independent’ as it relates to food and fuel security, and its people are more empowered and less dependent on the state — all of which is demonstrated by improved social outcomes, and consistent credit ratings upgrades, for example. The key takeaway here is that accountability drives results. Jamaica gives the wider Caribbean hope that it is possible to overcome longstanding structural constraints through targeted institutional reforms and fiscal discipline in particular, underpinned by broad-based support for a powerful implementation mechanism of publicly and regularly holding the Government to account for achieving its mandate.
The information provided by MD as part of this report and online content derived thereafter is the property of MD, and cannot be copied, reproduced, modified, republished, repackaged, posted, displayed, transmitted, distributed, redistributed or sold in any way, either in whole or in any part without the prior written permission and consent of MD.
